23 October 2016

Charitable Trusts and Comparative Law

'The Development of the Public Benefit Requirement for Charitable Trusts in the Nineteenth Century' by Matthew Mills in (2016) 37(3) Journal of Legal History 269-302 comments

The first express judicial reliance on the public benefit requirement for charitable trusts to conclusively determine charitable validity seems to occur in 1862, although implied references to similar ideas are seen up to a century previously. With limited exceptions, the origin of the public benefit requirement has been under-examined. This article argues that a multi-factorial and contextual approach best explains its adoption in the nineteenth century. Three developments in nineteenth-century law and society encouraged judges to broaden charity law: (1) increasing religious pluralism, (2) increasing state education, and (3) regular income taxation. These changes, combined with the formalization of the doctrine of precedent, required both some limit on the scope of charity law and a new substantive justification for novel decisions on charitable validity. This article argues that judges and lawyers, whether intentionally or subconsciously, borrowed ideas of public benefit from closely related mortmain cases to develop the public benefit requirement.

In questioning conventional theorisation Mills argues

Although the public benefit requirement was only written into English statute in 2006, and the distinction between its first and second senses only formally judicially recognized in 2011, we see judges explicitly relying on the public benefit requirement alone to conclusively determine issues of charitable validity over 140 years earlier. As explained above, before then judges had chiefly asked whether charitable purposes were within the spirit and intendment of the Statute of Charitable Uses 1601 to determine charitable validity.

The first case in which public benefit was held expressly to be decisive of charitable validity seems to be in Rickard v Robson in 1862. There, using similar language to counsel, Sir John Romilly MR says ‘a gift merely for the purpose of keeping up a tomb or building which is of no public benefit, and only an individual advantage, is not a charitable use but a perpetuity’. Conversely, ‘if the gift is to keep up an institution for the benefit of the public, then it is clearly a charity’. Romilly MR thus holds that public benefit in the second sense is a necessary condition for a charitable trust as a trust yielding ‘only an individual advantage’ is not a charity; this arguably raises both cross-sectional public benefit and incidental private benefit. Romilly MR, however, did not attempt to distinguish between the two senses of public benefit; indeed, his judgment seems to conflate the two by suggesting that the trust was not charitable under the Statute of Charitable Uses 1601 (the first sense; conceptual) because it did not provide benefit to a sufficient section of the population (the second sense; cross-sectional).

Less than seven years later, in Beaumont v Oliveira the Court of Appeal in Chancery held that testamentary gifts to the Royal Geographic Society and the Royal Society ‘subsist for [educational] purposes and no others, therefore for public purposes – therefore, for the advancement of objects of general public utility – therefore for purposes analogous and similar to those mentioned in the statute of Elizabeth – therefore for charitable purposes’. Although this scatter-gun reasoning aims to cover all possible justifications for a finding of charity to support the court’s desired result, within it is a clear suggestion that if a charity’s purpose provides public benefit in the first sense (conceptual public benefit) then it will be a valid charitable trust. Therefore, Beaumont uses public benefit in the first sense being to justify the validity of a new type of charitable trust. It is interesting to observe that both senses of the public benefit requirement can arguably be traced to cases in the 1860s, although those cases did not distinguish the two.

The third explicit judicial reference is from the important 1871 case of Cocks v Manners. In discussing the validity of testamentary gifts to two orders of Roman Catholic nuns, Wickens VC stated that ‘religious purposes are charitable, but that can only be true as to religious services tending directly or indirectly towards the instruction or the edification of the public’. Because one of the donees was a set of cloistered nuns, Wickens VC accordingly used the lack of public benefit in the first sense (demonstrable public benefit), as the purpose did not ‘tend’ to meaningful benefit, to justify invalidating the purported religious charitable trust. This seems to be the first example of public benefit in the first sense being used to invalidate a purported charitable trust. Unfortunately, however, Wickens VC seems to conflate Garton’s two parts of public benefit in the first sense by suggesting that a religious trust for cloistered nuns was ‘neither within the letter nor the spirit’ of the Statute of Charitable Uses 1601 (conceptual) because such a trust would not tend to benefit to the public (demonstrable).

In 1875, the Privy Council adopted a similar approach. A testatrix had left a will directing, amongst other things, ‘that a house for performing religious ceremonies to my late husband and myself be erected’. The court held that ‘gifts for purposes useful and beneficial to the public … in a wide sense of the term, are called charitable uses’ (conceptual public benefit). Applying this principle, ‘the only point therefore requiring consideration can be, whether there is anything … which would render such [a disposition] beneficial or useful to the public’. The court concluded that the disposition ‘does not seem to fall within any definition of a charitable duty or use. The observance of it can lead to no public advantage, and can benefit or solace only the family itself’. Once more we see the court using a lack of public benefit in the second sense (incidental private benefit) to justify invalidating a purported religious charitable trust.

A thinly reasoned example arose in the House of Lords in 1882. In upholding the charitable status of oyster fishing rights held by the Saltash Corporation for the beneﬁt of Saltash freemen, Earl Cairns stated that it was ‘a charitable, that is to say a public, trust or interest, for the benefit of the free inhabitants of ancient tenements’. Although no substantive discussion was given to why such an arrangement involves a charitable trust, the conclusion that the charitable trust was valid seems to be premised on the presence of (conceptual) public benefit in the first sense. This quotation was cited three times in 1888, including by Lindley LJ who, just five years later, gave his own version of the public benefit requirement. Earl Cairns also alluded to (cross-sectional) public benefit in the second sense to justify his conclusion when he stated that the trust would not be void for being ‘for the benefit of private individuals or a fluctuating body of private individuals’.

In 1885 we find our first clear use of the public benefit requirement in the second sense in upholding a charitable trust. Derby Railway Servants Orphanage applied to court to confirm that it was exempt from district rates under the Public Health Act 1875 on the basis that it occupied its property ‘exclusively for the purposes of public charity’. In holding that the orphanage was such a charity, and exempt from the rates, Manisty J assumed that its purposes were charitable in nature. The only question was thus ‘whether this charity is not for a large and extensive section of the community’ to qualify as a public charity under the Act. After citing Lord Hardwicke’s remarks from Pearce, extracted above, Manisty J concluded that ‘this charity is extensive. It extends to the whole of the railway servants all over England’. This short decision contains what seems to be the first use of the second sense of the (cross-sectional) public benefit requirement to justify upholding charitable status. Furthermore, Manisty J’s decision impliedly suggests a difference between being charitable in nature (conceptual public benefit) and being for the benefit of a sufficient section of the public (cross-sectional public benefit) – arguably implying a difference between two senses of public benefit.

In the late 1880s two further decisions at first instance held that a lack of public benefit in the second sense (incidental private benefit) justified invalidating a purported religious charitable trust. First, in 1886 North J cited and followed the above passages from Romilly MR’s judgment in Rickard to hold that a charitable trust to keep in repair a churchyard was ‘for the benefit of the parish at large’, but a trust to keep in repair a family tomb was ‘only ministering to [the testator’s] own private feeling or pride’. Second, in 1888 Chitty J applied Cocks v Manners to hold that a gift to a society who privately prayed for the suppression of animal cruelty was not charitable because ‘a mere improvement of the individual by private prayer … is not a purpose of public or general utility within the statute’.

In 1891, the House of Lords handed down the seminal decision in Pemsel, a case concerning the meaning of ‘charitable purpose’ within the Income Tax Act 1842. In holding that the technical English meaning should apply to that phrase, Lord Macnaghten famously stated:

‘Charity’ in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads.

Although this section merely intended to ‘clear the ground’ for the rest of the judgment, Lord Macnaghten’s fourth category seems to turn public benefit in the first sense into a formal, abstract, ‘catch-all’ category of valid charitable trusts. Furthermore, the House of Lords appeared to use reasoning based on (conceptual) public benefit in the first sense to justify upholding the charitable status of a new type of charity.

In the 1893 decision of Re White, which concerned bequests to unstated ‘religious societies’, the Court of Appeal confirmed Cocks v Manners and that a lack of (demonstrable) public benefit in the first sense can invalidate a purported religious charitable trust. Lindley LJ, giving the judgment of the court, stated that ‘[a] society for the promotion of private prayer and devotion by its own members, and which has no wider scope, no public element, no purposes of general utility, would be a “religious” society, but not a “charitable” one’. On the facts, however, since no particular religious societies were named the court assumed the trust would be charitable.

Finally, in 1895, two relevant charitable trust cases were decided within three months which relied on different senses of the public benefit requirement. In the first, Chitty J, using similar language to his 1888 judgment, stated that ‘[t]o be a charity there must be some public purpose – something tending to the benefit of the community’. Applying this, Chitty J accepted that gifts to support anti-vivisection organizations could be charitable trusts since they were for the public benefit in the first sense (conceptual public benefit). Interestingly, Chitty J also stated that ‘whether, if [the organisations] achieved their object, the community would, in fact, be benefited is a question on which I think the Court is not required to express an opinion’. This suggests that at least Chitty J regarded positive proof of demonstrable public benefit as unnecessary for charitable validity; it is unclear whether he would have also stated a proven lack of such benefit is irrelevant. By 1895, we thus cannot be sure that the courts distinguished the different senses of the public benefit requirement.

In the second 1895 case,Re Nottage (No 1), both Kekewich J and the Court of Appeal held invalid a bequest to support the Yacht Racing Association and establish a yachting competition. Kekewich J stated that ‘in order to find that a gift is charitable, the Court must come to the conclusion that the benefit of the community is the direct, and not the remote, object of the gift’ but concluded that the purported charity did not do this. Kekewich J thus seems to be the first judge to rely on a refined version of the first sense of the public benefit requirement (demonstrable public benefit) to invalidate a purported charitable trust because the nature of the benefit to the community from the Yacht Racing Association was too indirect. On appeal, Lopes LJ confirmed that the purported charitable trust was invalid but stated that this was because its object was ‘the encouragement of a mere sport or game primarily calculated to amuse individuals apart from the community at large’. Lopes LJ seems to be relying on the second sense of the public benefit requirement (incidental private benefit) to justify the same conclusion as Kekewich J; that the bequest did not create a charitable trust. Re Nottage thus confirms that both senses of the public benefit requirement were used by judges to invalidate purported charitable trusts, and that judges still had difficulty agreeing on which senses were relevant in each case.

To summarize, between 1862 and 1895 we see the public benefit requirement explicitly used to determine charitable validity in twelve different judgments, five of which were at Court of Appeal level or higher. Importantly, in these first cases we see different senses of the public benefit requirement being distinguished. We see in the early cases judges using both of the two senses of the public benefit requirement as distinguished by the Upper Tribunal in the Independent Schools Council case (that the nature of the purpose benefits the community and that a sufficiently numerous cross-section are benefited). We also see those judges using all four of Garton’s elements of public benefit (conceptual public benefit, demonstrable public benefit, cross-sectional public benefit, and incidental private benefit). However, sadly these different senses or elements were never clearly distinguished. We also see the two senses of the public benefit from the Independent Schools Council case being used to justify both validating and invalidating a purported charitable trust; this is true for Garton’s demonstrable and cross-sectional public benefit, but not for conceptual public benefit (which was only used to validate) or incidental private benefit (which, unsurprisingly, was only used to invalidate). In short, proof of one aspect of public benefit could be used to justify the validation of a novel charitable trust (supporting, for example, anti-vivisection, the Royal Society or a town’s oyster fishing rights) and the lack of one aspect could be used to invalidate a prima facie valid charitable trust (e.g. a yachting cup or the maintenance of one’s own grave). The only thing missing was a case explicitly discussing more than one aspect of the public benefit requirement to settle their independent existence and precisely when they were required.

... by the late nineteenth century, following over 100 years of references to public benefit rhetoric by judges, barristers, and commentators, the public benefit requirement had become an established conceptual tool in cases concerning charitable validity. However, exactly why public benefit made the transition from rhetoric to requirement when it did is never made clear, and is not helped by the fact that references to public benefit were often very brief. But despite the primary sources failing to clearly explain this development, they do give a chronology to it. This section will therefore consider the other legal and social factors which explain the development of the public benefit requirement throughout the nineteenth century.

The major political, social, and economic changes of the nineteenth century led to fundamental changes in philanthropy. Indeed, from the late eighteenth-century philanthropy became ‘a social imperative’ in the upper and middle classes, and the number of new charities being set up per year increased nearly threefold. These changes put a greater number of charitable ‘experiments in benevolence’ before the courts. The litigation relating to these experiments provided the courts with the perfect opportunity for doctrinal development as they had to decide whether these new types of purported charitable gifts were and should be valid – and had to develop the law accordingly.

Mills goes on to discuss four specific factors as "key catalysts" for the development of the public benefit requirement:

1) increased religious pluralism,

2) the birth of state education,

3) the birth of regular income taxation, and

4) the formalization of the doctrine of precedent.

'The Comparative Distinctiveness of Equity' by Mark Leeming in (2016) 2(2) Canadian Journal of Comparative and Contemporary Law 403-420 comments

Comparative law is difficult and controversial. One reason for the difficulty is the complexity of legal systems and the need for more than a merely superficial knowledge of the foreign legal system in order to profit from recourse to it. One way in which it is controversial is that it has been suggested that the use of comparative law conceals the reasons for decisions reached on other grounds. This paper maintains that equity is distinctive, and that one of the ways in which equity is different from other bodies of law is that there is greater scope for the development of equitable principle by reference to foreign jurisdictions. That difference is a product of equity’s distinctive history, underlying themes and approach to law-making. Those matters are illustrated by a series of recent examples drawn from appellate courts throughout the Commonwealth.

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